Some courts are getting fair use analyses about transformative works wrong

Some courts mistakenly view transformative use as merely using a work in a way different from that which the copyright owner currently does.The true meaning is that transformative use is a use that transforms portions of the original into an entirely new work that does not simply supersede the original in a market or use to which the original may not yet have been applied.

Transformative use, a feature of fair use doctrine since the Supreme Court’s decision in Acuff-Rose, never meant “using” a work in a market or for a purpose the author has not yet entered or emphasized.Rather, it means “using” (copying, etc.) portions of the work to create a new, differently focused work – such as by recasting the portions into a parody of the original or for purposes of criticism.But some courts lose sight of this, treating comprehensive commercial copying as transformative fair use and shifting control of potential markets away from content providers.

The Supreme Court in Acuff-Rose described a “transformative use” as follows:

The enquiry here may be guided by the examples given in the preamble to § 107, looking to whether the use is for criticism, or comment, or news reporting,and the like. The central purpose … is to see … whether the new work merely “supersede[s] the … original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is “transformative.”

“Criticism, comment, news reporting, parody, and the like” – using parts of the original and adding something new that makes for a new work as compared to merely superseding (using) the original work; these are the hallmarks of a transformative work.A transformative use in this form is not per se legal, but it weighs in favor of fair use.This is because the copying of the original author’s expression contributes to a new work and achieving the “goal of copyright, to promote science and the arts…”

“Transformative copying” (use) may involve making a derivative work or a partial copy of the original in a new work.This may be held to be non-infringing for reasons that lie in a goal of permitting creative adaptation, criticism and the like.The reasons are not grounded in the notion that a third party can supersede a commercial market simply because the copyright owner has not yet and may never decide to enter.

Assume that I write a book for lawyers on the topic of contract law.A third party copies the book and sells copies for use in teaching her high school class.Is that a “transformative use”?Of course not.Even if I never plan to enter the high school market, the use of the book in that market by the high school teacher supersedes my work in that market.It appropriates a commercial market for the free-riding teacher – the high school class market.Most copyright owners would grant a fee-based license even if we had never thought about the value of that market in the first place.But a finding of fair use makes the work free for the taking.Even if the owner refused to grant a license, a decision to withhold a work from a market is just as fully within the scope of a copyright as is a decision to enter it.

Is a motion picture derived from a best-selling novel a transformative fair use because the book author does not intend to sell motion picture rights?Again, of course not.

But compare this to a few recent decisions.

In Perfect 10 v. Amazon.com, 487 F.3d 701, 82 U.S.P.Q.2d 1609 (9th Cir. 2007), the Ninth Circuit held that comprehensive copying of images from the internet into thumbnail format and using them in an Internet visual search engine was “highly” transformative fair use. Google did not add to the images, did not critique them and created no new work, but merely reduced their size and resolution and used them for its own purposes.Perfect 10 in fact had begun marketing thumbnails for cell phones. Yet, the court concluded Google’s unauthorized copying did not affect the market for the images.But of course it did.A market existed for use in search engines.The court’s ruling closes that market – why license and pay for what you can get for free?

Consider also the AV Paradigms case (2008 WL 728389 (ED Va. 2008)).There, students were required to submit their school papers to the iTurnitin service, which checked for plagiarism.The students did so, but objected to iTurnitin copying the work into its database.In lengthy dicta, the court held that this copying (of the entire work) was a “transformative use.”But what was the transformation? It resided in how the defendant used the copy it made – as part of a searchable database, rather than as a school paper.

These two courts mistakenly view transformative use as merely using a work in a way different from that which the copyright owner currently does.The true meaning is that transformative use is a use that transforms portions of the original into an entirely new work that does not simply supersede the original in a market or use to which the original may not yet have been applied.Consider again what the Supreme Court said about why a parody using small parts of the original was a transformative commercial use:

Indeed, as to parody pure and simple, it is more likely that the new work will not affect the market for the original … by acting as a substitute for it … The market for potential derivative uses includes only those that creators of original works would in general develop or license others to develop. Yet the unlikelihood that creators of imaginative works will license critical reviews or lampoons of their own productions removes such uses from the very notion of a potential licensing market. “People ask ... for criticism, but they only want praise.”

At last, at last, at last!! Someone willing to strip the misinterpretations away from the basic principle. As counsel to many clients with content they want to commercialize (or simply distribute) in the digital world, I am constantly stunned at the hubris of licensees or potential licensees. Perfect 10 provides a loophole the size of the hole in the ozone layer.

What to do? One can make it clear in a license but that does not protect against users who simply find content and derive a work from it. There is less of a problem in the non-US markets but it still is not pretty.